Asia Outlook of Supply and Demand Trends of Petroleum Products ...
IEEJ : February 2006
Asia Outlook of Supply and Demand Trends of Petroleum Products and Crude Oil Hidehiro Unoki, Senior Economist, Econometric Analysis Group Toshihide Ohnuma, Senior Economist, Econometric Analysis Group The Energy Data and Modeling Center The Institute of Energy Economics, Japan Table of contents I.
International working group for study of a series of framework for petroleum industry in 2004: Supply and demand trends by using econometric model) 1. Research background and objective.......................................................................................1 2. Issues presented by the international working group in FY2004 ............................................1
II. Course of the studies of the international working group 1. Activities of the international working group in FY2004...........................................................2 2. Case development and major premises..................................................................................2
III. Analysis of petroleum product supply and demand (2010 and 2015) 1. Forecast of petroleum product demand in East Asia and Asia as a whole .............................6 2. Refining capacity in East Asia and Asia as a whole ................................................................7 3. Balance of petroleum product supply and demand in East Asia ...........................................11 4. Balance of Japanese import and export, and future prospects.............................................18 5. Implications ...........................................................................................................................20
IV. Analysis of crude oil supply and demand (2020 and 2030) 1. Major premises .....................................................................................................................23 2. Forecast of crude oil supply and demand in the base case ..................................................27 3. Perspectives on the crude oil situation on the supply side....................................................34 4. Long-term viewpoint in crude oil supply and demand in Asia (2030) ....................................38 5. Summary of analysis results, and implications .....................................................................41
IEEJ : February 2006
Ⅴ. Reference: Outline of the models (forecast methodology and flow leading up to supply and demand analysis) 1. Outline of the world oil model................................................................................................46 2. Structure of the energy demand model .................................................................................47 3. Structure of the oil refining and trade flow model ..................................................................48 4. Flow leading up to forecast pf petroleum products supply and demand in East Asia ...........50
Attached figures and tables: Crude oil supply and demand 1. Flow chart and matrix of crude oil trade in each region 2020 2. Flow chart and matrix of crude oil trade in each region 2030 Supply and Demand balance of petroleum product by each country and product in Asia 1. Case of existing plans 2. Case of higher supply capacity in China 3. Case of lower growth in Asia
IEEJ : February 2006
Ⅰ.
International Working Group for Study of Framework for Petroleum Industry in 2004: Supply and Demand Trends of Petroleum Products and Crude Oil by using Econometric Model
1.
Research background and objective Prior to the economic crisis that struck the Asian region in 1997, the demand for oil in East Asia outside Japan grew at a rapid pace averaging on the order of 7% annually. This growth was a major concern as viewed from the aspect of assuring a stable supply of oil to Japan. However, in 1998, directly after the outbreak of the crisis, the situation rapidly worsened. The Asian demand for oil declined and created a surplus supply of petroleum products. More recently, the rapid expansion of demand accompanying economic growth in China is causing apprehensions about another tightening of the product supply. This year, too, there have surfaced developments with a big impact on the oil industry, including record-high crude oil prices and the continuing fighting in Iraq. In this climate of sweeping change, it will presumably continue to be increasingly vital to conduct analyses, incorporating the latest energy and economic information, of the petroleum product supply and demand in East Asia, which has an especially big impact on the supply and demand in Japan. Furthermore, the long-term outlook holds the prospect of an expanding demand for oil products and crude oil in Asia in general and China in particular. Under these circumstances, it is surely of great worth to Japan's energy security to make a quantitative analysis of the changes in the mix of crude oil sources and related possibilities, followed by an estimate of the impact on Japan's crude oil import. This research was implemented by the Institute of Energy Economics Japan (IEEJ) on commission from the Ministry of Economy, Trade and Industry under the provisions for investigative research of the oil industry (FY2004 study of the trend of petroleum product supply and demand using econometric models). The research was promoted by organizing an international working group (WG) to pursue the studies in a committee.
2. Issues presented by the international working group in FY2004 (1) China is expected to continue achieving economic growth on the 8% order over the coming years. The jump in its oil demand in correspondence with this rate and the lifting of restrictions on trade in petroleum products along with its admission into the World Trade Organization (WTO) are anticipated to have a major influence on all of East Asia given the magnitude of its demand. The most important consideration in forecasting the petroleum product demand is the trend of increase in China's refining capacity. It is difficult to predict this trend because of the many variables involved. For this reason, as in last year, the WG placed a separate case of higher CDU capacity in China for a diversified analysis. (2) The outlook for the sustainability of China's economic growth is clouded by numerous factors of uncertainty, including the appreciation of the renminbi (RMB) and domestic gaps in respect of advancement. A slowing of growth around 2010 would undoubtedly affect other Asian countries, and the degree of decrease in the oil demand accompanying the deceleration of economic growth in Asia would come to the fore as a key point. For these reasons, the WG also considered the case of lower economic growth in Asia. (3) There are also apprehensions about a rapid rise in import of crude oil in China and other parts of East Asia. It may also be noted, however, that oil development is moving ahead in the Russian Federation and other areas outside the Middle East and near Asia. The WG therefore decided to make a forecast of the long-term trend of crude oil supply and demand in the world as a whole in 2020 and 2030 based on the long-term trend of production of both Middle East and non-Middle East crude oil, and investigate the effect on Japan's crude oil import. (4) More specifically, the WG focused on the East Asian region for the crude oil supply and demand as well, and made an analysis of the prospective change in degree of dependence on the Middle East for supply in China and Japan, and the trend of competing crude oil, as of 2030. It also made an analysis of the impact of a higher average heaviness in crude oil production worldwide and expansion of API index differentials.
This awareness formed the backdrop for the WG study of the future trend of crude oil and petroleum product supply and demand in East Asia.
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IEEJ : February 2006
II.
Course of the studies of the international working group
1. Activities of the international working group in FY2004 (1) Beginning in December 2004, the WG was convened three times for analysis of the international petroleum product supply and demand in 2010 and 2015, and the international crude oil supply and demand in 2020 and 2030, mainly in East Asia* (here and below, excluding Japan unless noted otherwise). *As used in this report, the term "East Asia" refers to the countries (or territories) of China, Korea (i.e., the Republic of Korea), Taiwan, Hong Kong, Singapore, Brunei, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam. (2) As for the analytical methodology, the WG applied the world energy demand estimate model (econometric model) and world oil refining and trade flow model (linear programming model) of the IEEJ's Energy Data and Modeling Center. Based on the problem awareness described above, studies focused on the oil supply and demand in East Asia, and proceeded by pooling the knowledge of the WG members. (For an outline of the models and analytical methodology, see the attachment.) 2. Case development and major premises (1) GDP growth rate forecast Gross domestic product (GDP) growth rates were set on the levels shown in Table 1 based on the forecasts announced by the Asian Development Bank (ADB), the planning figures released by national governments, and information from field studies. Table 1 Forecast of GDP growth rates in East Asian countries (average annual growth rates; %) Asia
Average annual growth rate; % Case of lower economic growth in Asia
Existing CDU plan case 2010/2002
2015/2010
2020/2015
2030/2020
2015/2010
2020/2015
2030/2020
China
8.0
6.6
6.6
5.1
5.6
5.6
4.1
Hong Kong
4.5
4.6
4.5
4.4
3.6
3.5
3.4
Taiwan
4.6
4.0
3.4
2.6
3.0
2.4
1.6
Korea
4.8
3.6
3.3
2.7
2.6
2.3
1.7
Singapore
4.0
3.7
3.7
3.9
2.7
2.7
2.9
Brunei
4.4
3.9
3.7
3.5
2.9
2.7
2.5
Indonesia
4.5
4.5
4.5
4.2
3.5
3.5
3.2
Malaysia
5.0
5.0
5.0
4.8
4.0
4.0
3.8
Philippines
4.1
4.9
4.9
4.6
3.9
3.9
3.6
Thailand
5.5
5.0
5.0
4.8
4.0
4.0
3.8
Vietnam
7.0
6.0
6.0
5.6
5.0
5.0
4.6
East Asia total (excluding Japan)
7.6
6.3
6.3
5.0
5.3
5.3
4.0
Japan
2.0
1.7
1.7
1.2
1.2
1.2
0.7
India
6.1
5.5
5.5
5.3
4.5
4.5
4.3
Other Asian countries
6.4
6.1
6.1
4.9
5.1
5.1
3.9
Asia total (base demand)
6.1
5.4
5.5
4.5
4.4
4.6
3.5
Source: prepared with reference to data from long-term economic plans and outlooks prepared by the ADB and the related institutions of national government in the countries in question. * In the case of lower economic growth in Asia, the GDP growth rate forecast values for 2011 and succeeding years were set 1% lower in other Asian countries, and 0.5 % lower in Japan, than in the existing plan case.
(2) Crude oil price The study applied to the crude oil price forecasts from "Annual Energy Outlook 2005" prepared by the U.S. Department of Energy (DOE). Table 2 Forecast of crude oil prices ($/bbl)
Real 2001 prices Nominal prices
2002 22.7 23.7
2004 33.0 35.7
2007 25.7 29.5
2010 23.6 28.7
2
2015 25.7 34.6
2020 28.3 42.0
(US$/bbl) 2025 31.6 51.9
IEEJ : February 2006 Source: "Annual Energy Outlook 2005 (Early Release)" by DOE/EIA
(3) Cases studied (Factors of fluctuation and case development) There are various factors of fluctuation to be considered in forecasts of the crude oil and petroleum product supply and demand, and the absolute forecast figures will vary depending on changes in the premises (preconditions) regarding them. As such, in studies for future policy-making, a proper apprehension of the conceivable changes that could possibly occur and quantitative analysis of their occurrence possibility and degree of influence are thought to be more important than a weighing of the highness or lowness of the absolute forecast values. The WG consequently developed several cases (noted below) which were judged to have a high possibility of occurrence and a high degree of influence.
(Notable item: perspective on supply capacity in China ) In the following cases, the factor with the greatest influence on the petroleum product supply and demand in Asia is the outlook on refining capacity in China. The 2015 capacity resulting from implementation of existing plans for capacity increase would not be large enough to meet the demand increase forecast to that year. There is consequently thought to be a good possibility of the addition of new plans for capacity increase to the level in the case of a high supply (refining) capacity (10.4 million b/d), provided that the demand remains firm. 1) Summary of cases in the study of petroleum product supply and demand (the details are presented in later sections) Table 3 Case
Overview of cases applied in the study Subject years
1
Differences from the base case
1
Existing CDU plan case
2010, 2015
2
Case of higher CDU capacity 2 in China (10.4 million b/d)
2015
CDU capacity of 10.4 million b/d, 1 million more than the base case level of 9.4 million b/d
3
Case of lower economic growth 3 in Asia
2015
Downward revision of the GDP growth rate, etc., beginning in 2010 (see the f o l l o wi n g page)
* The expanded refining capacity would consist of crude distillation units (CDUs) and secondary equipment.
2) Summary of cases in the study of long-term crude oil supply and demand (the details are described in Chapter IV, "Analysis of crude oil supply and demand") Table 4
Case
1 2 3
Overview of cases applied in the study
Subject years
Differences from the base case
1
Base case
2020, 2030
2
Case of heavier crude oil mix
2030
Increase in the share of crude oil production occupied by heavy crude oil from Saudi Arabia, Canada, and other countries
3
Case of an expanded API disparity
2030
Expansion of the price disparity for a ten-degree API disparity from three dollars to five dollars
Hereinafter referred to as “Existing plan case” Hereinafter referred to as “Higher capacity case” Hereinafter referred to as “Lower growth case” 3
IEEJ : February 2006 (3) Petroleum product supply and demand - comparison of other cases with the existing plan case While the existing plan case is the same throughout the study, the following is a description of it as compared to each of the other cases. Differences between the existing plan case and the case of higher capacity in China Existing plan case (case of plans known at the present time, serving as the basis of comparison) The factor of fluctuation with the strongest influence on the oil supply and demand in East Asia is the outlook on refining capacity in China. Because it is difficult to predict the trend of this capacity, the existing plan case is premised on one of 7.9 million b/d in 2010 and 9.4 million b/d in 2015, based on the sums of planning figures from the findings of interviews with China's major oil companies (SINOPEC and CNPC) and the addition of the capacity of independent refiners. (Note: The possibility of this case becoming the actual supply capacity is regarded as low.) While the extent of expansion in the demand in China over the years 2010 - 2015 is estimated to reach 1.84 million b/d, the existing plans add up to a corresponding addition of only 1.5 million b/d, for a substantial shortage of 340,000 b/d. It is therefore thought that China will prepare additional plans for a further increase close to that in the case of a high supply capacity there. As such, this case is thought to have little possibility of actualization. This is why it was termed the "existing plan case" instead of the "base case." Higher capacity case It is also fully possible that the supply capacity in China will expand substantially as the demand increases, such that the country will have a self-sufficient supply of gas oil, which accounts for about 40% of its product demand. The WG therefore also studied the case of a higher capacity in China. The premise here is an increase of 1 million b/d (to 10.4 million b/d) in CDU capacity, with a commensurate increase in the capacity of secondary equipment as well. (Note: This case of supply capacity in China is thought to have the highest possibility of actualization.) It was assumed that any additional refineries would each have a capacity of around 300,000 b/d. This case would be realized with addition of three or four more refineries than in the existing plan case. It is thought to have the highest possibility of actualization, considering the anticipated tightening of the supply in Asia.
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IEEJ : February 2006 Differences between the existing plan case and the low growth case Existing plan case The forecast rate of economic growth is one of the premises of the forecast of the demand for petroleum products. The WG estimated these rates while considering economic outlooks prepared by national governments in the concerned countries, international institutions, and other such entities. For East Asia as a whole (excluding Japan), it projected an average annual growth rate of 7.6 % over the years 2002 - 2010 and 6.3% over the years 2010 – 2015, and forecast the petroleum product demand on this basis. For supply, it applied levels in those refining capacity plans thought to have the best prospects for actualization in each country. Lower growth case - Possibility of a slowing of economic growth in China (the engine of economic growth in the region) beginning in 2010, and accompanying deceleration of growth in the rest of Asia This case assumes an economic growth rate in Asia that is 1.0 % (0.5% in Japan's case) lower than in the existing plan case over the years 2010 - 2015. In this case, China and India would have annual average growth rates of 5.6 and 4.5%, respectively. As the projected rates in the existing plan case are on the conservative side, this case is thought to be fully possible as well. On the supply side, the WG made a review of the refining capacity in each country, and applied the same levels as in the existing plan case for China, Taiwan, and Vietnam, but made downward revisions relative to the existing plan case for other countries.
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IEEJ : February 2006
III. Analysis of petroleum product supply and demand (2010 and 2015) 1. Forecast of petroleum product demand in East Asia and Asia as a whole - Increase of about 5.8% in the demand for oil in East Asia; Asia accounts for about 40% of the increase in the world oil demand (1) Existing plan case The demand for petroleum products in East Asia, which slumped under the influence of the economic crisis in 1998, is projected to recover and increase at an annual average rate of 4.1% over the years 2002 – 2010. After that period, the demand will continue to increase at 3.5% annually over the years 2010 - 2015 with the support of firm economic growth. In addition, the world oil demand is projected to increase by 12.20 million b/d over the years 2002 - 2010, and the demand in Asia, by 5.50 million b/d. If so, Asia would account for about 46% of the amount of increase in the world demand. This trend should continue virtually unchanged over the years 2010 - 2015, and give Asia about 40% of the worldwide demand. Table 5
Trend of petroleum demand in East Asia and Asia Existing plan case
Unit: million of b/d
Amount of demand 2002
2010
Lower growth case
Amount of increase
2015
02-10
10-15
AAGR
02-15
10/02
10/15
Amount of demand
Amount of increase
2015
10-15
China
4.8
7.7
9.5
2.9
1.8
4.7
6.0
4.4
9.3
1.6
Hong Kong
0.3
0.3
0.4
0.0
0.0
0.0
1.7
1.8
0.3
0.0
Taiwan
0.9
1.1
1.2
0.2
0.1
0.3
2.2
1.0
1.2
0.1
Korea
2.3
2.6
2.8
0.3
0.2
0.5
1.3
1.4
2.7
0.1
Singapore
0.8
1.0
1.1
0.2
0.1
0.3
2.6
2.5
1.1
0.1
Brunei
0.0
0.0
0.0
0.0
0.0
0.0
3.5
2.8
0.0
0.0
Indonesia
1.2
1.6
1.9
0.4
0.3
0.7
3.4
3.3
1.8
0.2 0.1
Malaysia
0.5
0.7
0.8
0.2
0.2
0.4
4.5
4.4
0.8
Philippines
0.3
0.4
0.5
0.1
0.1
0.2
3.0
4.2
0.5
0.1
Thailand
0.8
1.0
1.3
0.3
0.2
0.5
3.7
4.4
1.2
0.2
Vietnam
0.2
0.3
0.4
0.1
0.1
0.2
6.2
5.1
0.4
0.1
12.2
16.7
19.9
4.6
3.1
7.7
4.1
3.5
19.4
2.7
Japan
5.6
5.4
5.3
-0.2
0.0
-0.2
-0.5
-0.2
5.1
-0.3
India
2.4
3.1
3.9
0.8
0.8
1.6
3.6
4.6
3.8
0.7
Other Asian countries
0.7
1.1
1.4
0.4
0.3
0.7
5.1
4.8
1.3
0.2
Asia total (base demand)
20.8
26.3
30.5
5.5
4.2
9.7
3.0
3.0
29.5
3.2
World total (base demand)
77.8
90.1
100.1
12.2
10.1
22.3
1.8
2.1
99.2
9.1
East Asia total (excld. Japan)
East Asia (excld. Japan)
15.6
18.6
19.8
37.3
Asia
26.7
29.2
30.4
46.2
21.2
25.1
28.7
3.9
Refining capacity in Asia
31.1
19.5
Share of the global increase occupied by East Asia/Asia
41.3 3.6
7.5
2.2
29.8 2.7
2.8
Figure 1
(millions of b/d) 12.0
Existing plan case Low growth case 9.7
10.0
8.7 7.7
8.0
7.2
6.0 4.74.5 4.0 1.6 1.4 0.3
0.5 0.4 0.3 0.3
-2.0
Ko re a Si ng ap or e
Ko ng
H on g
C hi na
0.0
0.7 0.5 0.2 0.6 0.4 0.2 0.3 0.2 0.4 0.2
B ru ne i In do ne si a M la ys ia P hi lip in es Ea Th st ai A la si nd a to ta V l(e iet xc na ld m .J ap an )
0.3
6
-0.2 -0.5
0.7 0.6
Ja pa O th n er A A si si a I n nd a co ia to ta un l(b tr ie as s e de m an d)
2.0
Ta iw an
Share (%)
3.1
IEEJ : February 2006 (2) Lower growth case In this case, which places rates of GDP growth in Asian countries that are 1.0% (0.5% in Japan) lower than in the existing plan case, the 2015 demand for petroleum products would be about 1 million b/d less than in the existing plan case in Asia, and about 500,000 b/d less in East Asia (excluding Japan).
2. Refining capacity in East Asia and Asia as a whole - Expansion of capacity led by China, with increases planned in Indonesia, Vietnam, and India as well (1) Refining capacity in Asia Addition of the figures in existing plans for capacity increase indicates that the refining capacity in East Asia will increase by about 2.8 million b/d over the years 2002 - 2010. The WG put the increase over the years 2010 - 2015 at 2.6 million b/d on the assumptions shown in Table 6. Although plans for construction in the years leading up to 2015 are not clear in many respects, the WG added figures in plans thought to have the best prospects for actualization based on information collected in the countries in question. The assumption that capacity would be increased in correspondence with the rate of growth in the regional demand formed another premise of the forecast for the 2015 capacity. Table 6 shows the breakdown of the regional capacity in terms of atmospheric distillation units (CDUs). The WG also assumed that secondary equipment capacity would increase in response to plans for environmental regulation of fuel oil on the regional level. Table 6
Refining capacity in Asia (breakdown) Unit: 1000 of b/d Increase
CDU capacity Country/region
2002
2010
2015 (Existing plan)
2015 (Low growth)
02-10
10-15 (Existing plan)
10-15 (Low growth)
China Taiwan Korea
5,619 1,220 2,750
7,900 1,310 2,750
9,400 1,376 2,951
9,400 1,376 2,892
2,281 90 0
1,500 66 201
1.500 66 142
Singapore Brunei Indonesia
1,269 9 1,073
1,337 9 1,273
1,337 9 1,573
1,337 9 1,448
68 0 200
0 0 300
0 0 175
Malaysia Philippines Thailand
515 420 991
545 335 1,075
677 335 1,334
670 335 1,294
30 -85 84
132 0 259
125 0 219
0
130
270
270
130
140
140
13,865
16,663
19,260
19,029
2,798
2,597
2,366
4,767 2,135 442
4,736 3,029 720
4,736 3,794 909
4,736 3,629 864
-31 894 278
0 765 189
0 600 144
21,209
25,148
28,700
28,258
3,939
3,552
3110
Vietnam East Asia (excluding Japan) Japan India Other Asian countries Asia total
* Assumptions - Figures for CDU capacity in 2010 are additions based on various documentation and information obtaine d from oil companies in the various countries. In the case of secondary equipment, the forecast incorporated plans for nationwide instatement of the Euro 3 standard in China and India in 2010, and assumed expansion into an equipment composition (especially as regards desulfurization equipment) on a par with that in Europe at present beginning in that year in neighboring countries as well. - Figures for 2015 are set on the level of current plans in the case of China, India, and Indonesia. In other countries where demand is anticipated to increase, it was assumed that the overall refining capacity would increase in step with the rate of demand increase. No increase was foreseen in Singapore, the Philippines, and Brunei. - In the lower Asian growth case, figures for 2015 are reduced by a margin commensurate with the lower demand. In the case of India and Indonesia, the WG estimated the amount of decrease from plans. The figures for China, Taiwan, and Vietnam are the same as in the existing plan case.
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IEEJ : February 2006 (2) Forecast of refining (CDU) capacity in China In China, there are independent refiners that help to fill the supply shortage for gas oil, which accounts for about 40% of the petroleum product demand. They perform mainly vacuum distillation of imported heavy fuel oil and produce low-quality gas oil to fuel on-premise power generation as well as asphalt and other petroleum products. They have strong ties with local governments and could survive as suppliers of products in China for the foreseeable future. 1) Refining capacity to 2015 (CDU capacity to 2010) Based on the findings of interviews with them as well as other documentation for facility additions and expansions whose year of completion is fairly certain, it is estimated that the combined refining capacity of the two big oil firms (SINOPEC and CNPC) will expand from about 5.3 million b/d at present to about 7.3 million b/d by 2010. The forecast for total refining capacity in China in 2010 is 7.9 million b/d based on addition of 600,000 b/d as the estimated CDU capacity of independent refiners (to be described below). As shown in Table 7, an increase of about 7.6 million b/d is planned over the years leading up to 2010, but about 600,000 b/d of this increase could be postponed to later years. In light of this possibility, the WG put the base case figure for 2010 at the mean of 7.3 million b/d. Table 7
CDU facility additions and expansions by major oil firms in China
Company Refinery
CNPC Dalian Petrochemical West Pacific Petrochemical Lanzhou Petrochemical Dushanzi Petrochemical Jinxi Petroleum Processing and Chemical Company SINOPEC Maoming Refining Guangzhou Phase 1 Guangzhou Phase 2 Shanghai Petrochemical/BP JV Yangzi Petrochemical/BASF JV Zhenhai Refining Luoyang Qingdao Huangdao
Jinling SINOPEC/Guangxi province JV Fujian: SINOPEC/ExxonMobil/ Aramco JV CNOOC Huizhou: CNOOC/Shell JV Tianjin: CNOOC/Dow Chemical JV Total addition Existing total Grand total
Additions/ expansions (thousands of tons)
Additions/ expansions (thousands of b/d)
Planned year of completion
10,000
200
2005
2,000 5,000 4,000 4,500
40 100 80 90
2005 2004 2005 2005
4,500
90
2004
2,300 8,000 5,200
46 160 104
2005 2008 2005
500
10
2005
6,000 2,000 10,000
120 40 200
2006 2005 2007
2,500 8,000
50 160
2005 2008 (target)
8,000
160
2008
12,000
240
2007
20,000
400
2010
114,500 265,800 380,300
2,290 5,316 7,606
Notes
Expansion in step with the China-Russia PL
Refining of Kazakhstan crude oil
Accompanying construction of the Maoming-Kunming PL Provisional Complex with 900,000-ton ethylene facility Complex with 700,000-ton ethylene facility
Policy to close 21 small refineries in the province upon completion of new projects with Shandong province Agreement with the province; start of construction in 2004 Complex with 800,000-ton ethylene facility
Complex with 800,000-ton ethylene facility Complex with 600,000-ton ethylene facility Based on plans to 2010 About 7 million b/d with postponement of 160,000 b/d in the SINOPEC/Guangxi project and 400,000 b/d in the CNOOC/Dow project to 2010.
Source: Based on the 2004 edition of "Oil and Petrochemical Industry in China," published by Tozai Boeki Tsushinsha, and interview data.
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IEEJ : February 2006 (CDU capacity to 2015) (Existing plan case) The facility construction in plans over the years leading up to 2015 would give the major refiners a combined capacity of 440 million tons per year (about 8.8 million b/d). Although there is some uncertainty about the firmness of the plans and years of completion, the WG estimated the standard CDU capacity in 2015 at 9.4 million b/d on the assumption that the whole plans would be completed by 2015 and that there would be no decrease in the 600,000-b/d CDU capacity of the independent refiners. (Case of higher capacity ) There is some uncertainty about the expansion of refining capacity as of 2015, and the currently disclosed plans would leave a shortage of 340,000 b/d relative to the demand increase over the years 2010 - 2015. For these reasons, there is a high possibility of the construction of three or four refineries in the 300,000-b/d class over the coming years. For 2015, the WG placed an addition increase of 1 million b/d in CDU capacity. Because the independent VDU refiners would lose competitiveness in this case, it was assumed their capacity would be halved to 200,000 b/d. Table 8
Premises in the forecast of refining capacity in China to 2015
2003 5,300
2010 7,300
2015 8,800
Unit: 1000 of b/d High supply capacity case (increase of 1 million b/d in CDU capacity) 2015 9,800
600 5,900 400
600 7,900 400
600 9,400 400
600 10,400 200
Existing capacity estimate
Major refiners (two oil majors and others) Independent refiners (with CDUs) CDU total Heavy fuel oil VDU capacity (asphalt plants)
Existing plan case
Source: Based on various materials and interview data with SINOPEC/CNPC etc.
2) Refining capacity of small independent refiners From the information gained from Chinese oil companies and trading firms as well as other sources, independent refiners nationwide are estimated to have a combined capacity of about 1 million b/d and to number in the range of 80 - 100. Those that do not have the right to import crude oil import heavy fuel oil and process it with VDUs to produce low-quality gas oil and asphalt (at asphalt plants). There are estimated to be from 30 to 50 such plants, mainly in Shandong and Guangdong provinces. These plants conduct a marginal operation in that they suspend production if prices for foreign heavy fuel oil are too high, and have operating rates averaging no more than around 50 or 60% for the year. The national government is planning for facility additions and expansions at the two Chinese majors and the closure of small-scale independent refiners. The latter, however, are tied to local governments and provide jobs. It is consequently thought that they will remain in operation as long as their business is paying. Estimate of the VDU capacity of independent refiners from the heavy fuel oil feed China's import of heavy fuel oil came to 25 million tons in 2003 and more than 30 million tons in 2004. Some 18 - 22 million tons of this total is thought to be directed to power plants and industry. Application of 20 million tons for this subtotal as the mean figure would leave about 10 million tons (200,000 b/d) for the independent refiners in 2004. Assuming an average operating rate of 50% at their plants, their heavy fuel oil refining capacity would come to about 400,000 b/d, and their CDU capacity was put at 600,000 b/d.
9
IEEJ : February 2006 Table 9
Types and estimated capacities of independent refiners
Type 1. With CDUs (and a crude oil processing quota) 2. Heavy fuel oil vacuum distillation Asphalt plants (operating rate of 50%)
1 + 2 = Independent refiner total
Capacity 600 400
1,000
Unit: 1000 of b/d Comments 50 - 60 plants, with a capacity of a few thousand - 20,000 b/d per plant Premise: 200,000 b/d of heavy fuel oil for independent refiners Great fluctuation in operating rates depending on heavy fuel oil prices and the gas oil spread Estimated number nationwide: 80 100
Source: estimates based on field studies and various information
Incorporation of heavy fuel oil VD refiners (asphalt plants) into the LP model Based on the aforementioned premises and assumptions, a distinction was drawn between conventional crude oil refining and heavy fuel oil VD refining (at asphalt plants). The flow shown in Figure 2 was added to the existing Chinese refining model for more accurate reflection of the situation of each type of refining. Based on the findings of interviews with SINOPEC, the rate of production through VD of imported heavy fuel oil was put at 40% for low-quality gas oil and 60% for other petroleum products (e.g., asphalt). Figure 2
Imported or domestically purchased heavy fuel oil LowQuality gas oil 40％
VD
Other products(asphalt or high-viscosity heavy oil） 60％
10
IEEJ : February 2006
3. Balance of petroleum product supply and demand in East Asia (1) Existing plan case - The balance of petroleum product supply and demand in East Asia (excluding Japan) is forecast to amount to a net import of 1.44 million b/d in 2010 and 2.00 million b/d in 2015. This suggests the need for a further increase in supply capacity in China. 1) Supply-demand balance The increase in supply (refining) capacity from 2002 to 2010 is expected to cover about 60% of the demand increase. Although operating rates would rise by about 9%, the supply-demand gap would widen to a 1.44-million-b/d import position. In 2015 as well, the petroleum product demand would exceed the refining capacity, and refinery-operating rates are forecast to rise further to 92%. At this point, the refineries would be operating at their full capacity, but would nevertheless be unable to fill the demand, and the import position would expand to 2.06 million b/d. This level of import would be 1.04 million b/d larger than the record-high import in 1995 (640,000 b/d), and would presumably present a problem of supply stability (to be described below). Table 10
Petroleum product supply-demand balance in East Asia (excluding Japan) and Asia as a whole (existing plan case)
Unit: millions of b/d Petroleum product demand Petroleum product production Supply-demand gap Subtotal: supply-demand gap in China Refining capacity Refining facility operating rate
2002
2010 12.2 11.4 -0.8 -0.4
16.7 15.3 -1.4 -0.8
13.9
19.9 17.8 -2.1 -1.2
16.7
82.2%
Amount of increase 02-10 10-15 4.7 3.9 -0.9 -0.6
2015
19.3
91.7%
2.8
92.4%
3.1 2.5 -0.6 -0.4 2.6
9.5%
0.7%
2) Refining capacity and supply-demand balance in China The supply-demand gap in China would account for about half of that in East Asia. China is going to construct new large-scale refineries over the coming years, and average-operating rates therefore should rise. According to information from the two major oil companies, however, the effective ceiling for the average operating rate is forecast at 85% in 2010 and 87% in 2015. Assuming an expansion in the net import of products in Asia as a whole, it would be doubtful whether China could actually import to cover its supply shortage. As such, the WG considered the case of a higher supply capacity in China (i.e., a further increase in its refining capacity; to be described below). Figure 3
12,000
9,400 7,900
0
2002
2010
11
2015
Demand in low growth plan case
Demand in exsinting plan case
Facility capacity
Actual demand
79.2%
Facility capacity
4,000
Rise in operatingt rate
379
4,451
Demand in exsinting plan case
85.0%
87.0%
Facility capacity
5,619 6,000
8,378
Rise in operatingt rate
770
6,915
Actual operating rate
(Thousands of B/D)
Increase of 2,281 B/D
8,000
2,000
1,148
Increase of 1,500 B/D
10,000
IEEJ : February 2006 A look at the forecast balance in each country reveals that the only Asian countries in an export position in both 2010 and 2015 are Taiwan, Korea, Singapore, and India. Margin for export in Singapore, where refining capacity is not expected to increase, is likely to decline with the approach of 2015. All of the other countries are in an import position. The import position of China including Hong Kong is forecast to rise from 1.09 million b/d in 2010 to 1.49 million b/d in 2015. Figure 4 F.Y.2010(Existing plan & Lower growth cases) China Hong Kong Chinese Taipei Korea Singapore Brunei Indonesia Malaysia Philippines Thailand Vietnam East Asia Total (excl. Japan) East Asia Total
F.Y.2015(Existing plan case)
-770
China -1,148 -351 Hong Kong 135 142 Chinese Taipei 40 41 Korea 317 191 Singapore -6 Brunei -8 -357 -348 Indonesia -135 -168 Malaysia -114 Philippines -212 -15 -19 Thailand -218 -183 Vietnam East Asia Total -1,443 -2,063 (excl. Japan) -2,299 -2,869 East Asia Total 100 India India 125 Other Asia -363 -458 Other Asia -3,202 Asia Total -2,561 Asia Total -3,000 -2,500 -2,000 -1,500 -1,000 -500 0 500 -3,500 -3,000 -2,500 -2,000 -1,500 -1,000 -500 0 500 （1000 B/D) （1000 B/D) Negative Figures indicate net import. Negative Figures indicate net import. -320
Analysis of China's import and export in each product category in the existing plan case - Considering the net import position of 1.15 million b/d in the existing plan case and the balance outside Asia, China is forecast to move in the direction of supply capacity expansion in 2015. In comparison between 2010 and 2015, when China's net import is forecast to expand further, the forecast envisions import from the Middle East and Russia to meet this increase. The import from Russia should increase by the greatest extent. Russia has shipment facilities for products other than LPG and produces straight run heavy fuel oil with little heavy metal content. For this reason, it is preferred as a supplier for on-premise power generation fuel and independent VD refiners of imported heavy fuel oil. At present, shipments are carried to ports from inland refineries by rail. From the ports, they are carried by tanker to the sites of demand in southern China (where there are many such independent refiners). However, it is questionable whether Russia will be able to export just under 400,000 b/d in 2015. Therefore, Chinese policy-makers and the two major oil companies will presumably effect a bigger expansion in product capacity by 2015 in order to avoid such an import position, which would be marked by deep uncertainty. Because there are no such concrete plans at present, however, the WG placed an additional case of a higher supply capacity in China, i.e., a CDU capacity of 1 million b/d more than in the existing plan case.
12
IEEJ : February 2006 Table 11 China Type of product Gasoline Naphtha Kerosene/Jet Gas oil Heavy fuel oil LPG Other Total
Existing plan case - China's product import and export in 2010
* Four countries 0 14 0 13 253 43 0 323
Import breakdown Middle East Russia Other countries 0 0 0 100 34 15 0 0 0 22 0 0 0 144 0 132 0 0 0 0 0 254 178 15
Import total 0 163 0 35 397 175 0 770
Unit: 1000 of b/d Export Net export 0 0 0 -163 0 0 0 -35 0 -397 0 -175 0 0 0 -770
* Four countries: Korea, Japan, Taiwan, Singapore
Breakdown of China's independent asphalt plants Input of imported heavy fuel oil 200
Table 12 China Type of product Gasoline Naphtha Kerosene/Jet Gas oil Heavy fuel oil LPG Other Total
Low-quality gas oil 40% 80
Asphalt 60% 120
Existing plan case - China's product import and export in 2015
* Four countries 0 0 0 186 160 12 0 357
Import breakdown Middle East Russia Other countries 0 0 0 126 67 71 52 37 0 22 0 0 0 239 0 148 34 0 0 0 0 348 376 71
Import total 0 264 89 207 398 193 0 1,152
Unit: 1000 of b/d Export Net export 0 0 0 -264 0 -89 0 -207 0 -398 0 -193 3 3 3 -1,148
* Four countries: Korea, Japan, Taiwan, Singapore
Breakdown of China's independent asphalt plants Input of imported heavy fuel oil 200
Low-quality gas oil 40%
Asphalt 60%
80
120
(2) Change in the supply-demand balance in the case of higher capacity (CDU and secondary equipment) in China in 2015 - Even in the case of a higher capacity in China, the East Asian region would be in a net import position of about 1.3 million b/d. Expansion of China's supply capacity is a vital key for stabilization of the product supply and demand in East Asia. 1) Analysis of the case of higher capacity in China This case places a CDU capacity that is 1 million b/d higher than in the existing plan case. In it, the 2010 gap with the demand would decrease from 770,000 to 380,000 b/d in China and to 1.4 million b/d in East Asia. The existing plan case assumes production at the maximum operating rate in all East Asian countries. In the case of higher capacity in China, too, it is assumed that production in these other countries will stay on this maximu m level and that the supply-demand balance will be the same as in the existing plan case. Table 13 Petroleum product supply-demand balance in East Asia (excluding Japan) (case of higher capacity in China) (Unit: millions of b/d) Petroleum product demand Petroleum product production Supply-demand gap Subtotal: supply-demand gap in China Refining capacity Refining facility operating rate
2002
2010 12.2 11.4 -0.8 -0.4
16.7 15.3 -1.4 -0.8
13.9 82.2%
2015 19.8 18.5 -1.3 -0.4
16.7 91.7%
13
Amount of increase 02-10 10-15 4.7 3.9 -0.9 -0.6
20.3 91.1%
2.8 9.5%
3.0 3.2 0.1 0.4 3.6
-0.6%
IEEJ : February 2006 In the case of higher capacity in China in 2015, the supply-demand balance in East Asia would amount to a net import of 1.3 million b/d, 760,000 b/d less than in the existing plan case. In this case, the average operating rate in Chinese refineries would decline by 1%, and production of gas oil by cracking imported heavy fuel oil would decline by 40,000 b/d. Petroleum product production would increase by 670,000 b/d, and China's net import position would shrink to about 380,000 b/d. Due to the increase in demand in other Asian countries, import would be 700,000 b/d higher than in 1995, when the highest import over the last ten years was recorded. (1000b/d)
Net Import
Net Export
Figure 5
400 -240
-350
0
-230
-400
Higher capacity case
-400
-380
-760
-640
-800 -1,300
-1,440
-1,200 -1,600 -2,000 -2,060
-2,400
2015
2010
2002
2000
1999
1998
1997
1996
1995
Existing plan case
As compared to the existing plan case, the amount of net import is lower in China, but there is not any change in the supply-demand balance for other countries because of the lack of change in demand and facility operating rates. As such, the situation of only four countries being in a net export position (Taiwan, Korea, Singapore, and India) would be the same as in the existing plan case. Figure 6
2015 (Case of higher capacity )
2015 (Existing plan case)
China
-1,148 -351
Hong Kong Chinese Taipei
142
Korea
-212
Thailand
-183
-19 -183
Vietnam
East Asia Total(excl. Japan) -2,063
East Asia Total(excl. Japan)
East Asia Total -2,869
India Other Asia
-168
Philippines
-19
Vietnam
-348
Malaysia
-212
Thailand
191 -8
Indonesia
-168
Philippines
142 41
Brunei
-348
Malaysia
-351
Singapore
-8
Indonesia
-382
Hong Kong Korea
191
Brunei
Net Export-->
China Chinese Taipei
41
Singapore
Asia Outlook of Supply and Demand Trends of Petroleum Products and Crude Oil Hidehiro Unoki, Senior Economist, Econometric Analysis Group Toshihide Ohnuma, Senior Economist, Econometric Analysis Group The Energy Data and Modeling Center The Institute of Energy Economics, Japan Table of contents I.
International working group for study of a series of framework for petroleum industry in 2004: Supply and demand trends by using econometric model) 1. Research background and objective.......................................................................................1 2. Issues presented by the international working group in FY2004 ............................................1
II. Course of the studies of the international working group 1. Activities of the international working group in FY2004...........................................................2 2. Case development and major premises..................................................................................2
III. Analysis of petroleum product supply and demand (2010 and 2015) 1. Forecast of petroleum product demand in East Asia and Asia as a whole .............................6 2. Refining capacity in East Asia and Asia as a whole ................................................................7 3. Balance of petroleum product supply and demand in East Asia ...........................................11 4. Balance of Japanese import and export, and future prospects.............................................18 5. Implications ...........................................................................................................................20
IV. Analysis of crude oil supply and demand (2020 and 2030) 1. Major premises .....................................................................................................................23 2. Forecast of crude oil supply and demand in the base case ..................................................27 3. Perspectives on the crude oil situation on the supply side....................................................34 4. Long-term viewpoint in crude oil supply and demand in Asia (2030) ....................................38 5. Summary of analysis results, and implications .....................................................................41
IEEJ : February 2006
Ⅴ. Reference: Outline of the models (forecast methodology and flow leading up to supply and demand analysis) 1. Outline of the world oil model................................................................................................46 2. Structure of the energy demand model .................................................................................47 3. Structure of the oil refining and trade flow model ..................................................................48 4. Flow leading up to forecast pf petroleum products supply and demand in East Asia ...........50
Attached figures and tables: Crude oil supply and demand 1. Flow chart and matrix of crude oil trade in each region 2020 2. Flow chart and matrix of crude oil trade in each region 2030 Supply and Demand balance of petroleum product by each country and product in Asia 1. Case of existing plans 2. Case of higher supply capacity in China 3. Case of lower growth in Asia
IEEJ : February 2006
Ⅰ.
International Working Group for Study of Framework for Petroleum Industry in 2004: Supply and Demand Trends of Petroleum Products and Crude Oil by using Econometric Model
1.
Research background and objective Prior to the economic crisis that struck the Asian region in 1997, the demand for oil in East Asia outside Japan grew at a rapid pace averaging on the order of 7% annually. This growth was a major concern as viewed from the aspect of assuring a stable supply of oil to Japan. However, in 1998, directly after the outbreak of the crisis, the situation rapidly worsened. The Asian demand for oil declined and created a surplus supply of petroleum products. More recently, the rapid expansion of demand accompanying economic growth in China is causing apprehensions about another tightening of the product supply. This year, too, there have surfaced developments with a big impact on the oil industry, including record-high crude oil prices and the continuing fighting in Iraq. In this climate of sweeping change, it will presumably continue to be increasingly vital to conduct analyses, incorporating the latest energy and economic information, of the petroleum product supply and demand in East Asia, which has an especially big impact on the supply and demand in Japan. Furthermore, the long-term outlook holds the prospect of an expanding demand for oil products and crude oil in Asia in general and China in particular. Under these circumstances, it is surely of great worth to Japan's energy security to make a quantitative analysis of the changes in the mix of crude oil sources and related possibilities, followed by an estimate of the impact on Japan's crude oil import. This research was implemented by the Institute of Energy Economics Japan (IEEJ) on commission from the Ministry of Economy, Trade and Industry under the provisions for investigative research of the oil industry (FY2004 study of the trend of petroleum product supply and demand using econometric models). The research was promoted by organizing an international working group (WG) to pursue the studies in a committee.
2. Issues presented by the international working group in FY2004 (1) China is expected to continue achieving economic growth on the 8% order over the coming years. The jump in its oil demand in correspondence with this rate and the lifting of restrictions on trade in petroleum products along with its admission into the World Trade Organization (WTO) are anticipated to have a major influence on all of East Asia given the magnitude of its demand. The most important consideration in forecasting the petroleum product demand is the trend of increase in China's refining capacity. It is difficult to predict this trend because of the many variables involved. For this reason, as in last year, the WG placed a separate case of higher CDU capacity in China for a diversified analysis. (2) The outlook for the sustainability of China's economic growth is clouded by numerous factors of uncertainty, including the appreciation of the renminbi (RMB) and domestic gaps in respect of advancement. A slowing of growth around 2010 would undoubtedly affect other Asian countries, and the degree of decrease in the oil demand accompanying the deceleration of economic growth in Asia would come to the fore as a key point. For these reasons, the WG also considered the case of lower economic growth in Asia. (3) There are also apprehensions about a rapid rise in import of crude oil in China and other parts of East Asia. It may also be noted, however, that oil development is moving ahead in the Russian Federation and other areas outside the Middle East and near Asia. The WG therefore decided to make a forecast of the long-term trend of crude oil supply and demand in the world as a whole in 2020 and 2030 based on the long-term trend of production of both Middle East and non-Middle East crude oil, and investigate the effect on Japan's crude oil import. (4) More specifically, the WG focused on the East Asian region for the crude oil supply and demand as well, and made an analysis of the prospective change in degree of dependence on the Middle East for supply in China and Japan, and the trend of competing crude oil, as of 2030. It also made an analysis of the impact of a higher average heaviness in crude oil production worldwide and expansion of API index differentials.
This awareness formed the backdrop for the WG study of the future trend of crude oil and petroleum product supply and demand in East Asia.
1
IEEJ : February 2006
II.
Course of the studies of the international working group
1. Activities of the international working group in FY2004 (1) Beginning in December 2004, the WG was convened three times for analysis of the international petroleum product supply and demand in 2010 and 2015, and the international crude oil supply and demand in 2020 and 2030, mainly in East Asia* (here and below, excluding Japan unless noted otherwise). *As used in this report, the term "East Asia" refers to the countries (or territories) of China, Korea (i.e., the Republic of Korea), Taiwan, Hong Kong, Singapore, Brunei, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam. (2) As for the analytical methodology, the WG applied the world energy demand estimate model (econometric model) and world oil refining and trade flow model (linear programming model) of the IEEJ's Energy Data and Modeling Center. Based on the problem awareness described above, studies focused on the oil supply and demand in East Asia, and proceeded by pooling the knowledge of the WG members. (For an outline of the models and analytical methodology, see the attachment.) 2. Case development and major premises (1) GDP growth rate forecast Gross domestic product (GDP) growth rates were set on the levels shown in Table 1 based on the forecasts announced by the Asian Development Bank (ADB), the planning figures released by national governments, and information from field studies. Table 1 Forecast of GDP growth rates in East Asian countries (average annual growth rates; %) Asia
Average annual growth rate; % Case of lower economic growth in Asia
Existing CDU plan case 2010/2002
2015/2010
2020/2015
2030/2020
2015/2010
2020/2015
2030/2020
China
8.0
6.6
6.6
5.1
5.6
5.6
4.1
Hong Kong
4.5
4.6
4.5
4.4
3.6
3.5
3.4
Taiwan
4.6
4.0
3.4
2.6
3.0
2.4
1.6
Korea
4.8
3.6
3.3
2.7
2.6
2.3
1.7
Singapore
4.0
3.7
3.7
3.9
2.7
2.7
2.9
Brunei
4.4
3.9
3.7
3.5
2.9
2.7
2.5
Indonesia
4.5
4.5
4.5
4.2
3.5
3.5
3.2
Malaysia
5.0
5.0
5.0
4.8
4.0
4.0
3.8
Philippines
4.1
4.9
4.9
4.6
3.9
3.9
3.6
Thailand
5.5
5.0
5.0
4.8
4.0
4.0
3.8
Vietnam
7.0
6.0
6.0
5.6
5.0
5.0
4.6
East Asia total (excluding Japan)
7.6
6.3
6.3
5.0
5.3
5.3
4.0
Japan
2.0
1.7
1.7
1.2
1.2
1.2
0.7
India
6.1
5.5
5.5
5.3
4.5
4.5
4.3
Other Asian countries
6.4
6.1
6.1
4.9
5.1
5.1
3.9
Asia total (base demand)
6.1
5.4
5.5
4.5
4.4
4.6
3.5
Source: prepared with reference to data from long-term economic plans and outlooks prepared by the ADB and the related institutions of national government in the countries in question. * In the case of lower economic growth in Asia, the GDP growth rate forecast values for 2011 and succeeding years were set 1% lower in other Asian countries, and 0.5 % lower in Japan, than in the existing plan case.
(2) Crude oil price The study applied to the crude oil price forecasts from "Annual Energy Outlook 2005" prepared by the U.S. Department of Energy (DOE). Table 2 Forecast of crude oil prices ($/bbl)
Real 2001 prices Nominal prices
2002 22.7 23.7
2004 33.0 35.7
2007 25.7 29.5
2010 23.6 28.7
2
2015 25.7 34.6
2020 28.3 42.0
(US$/bbl) 2025 31.6 51.9
IEEJ : February 2006 Source: "Annual Energy Outlook 2005 (Early Release)" by DOE/EIA
(3) Cases studied (Factors of fluctuation and case development) There are various factors of fluctuation to be considered in forecasts of the crude oil and petroleum product supply and demand, and the absolute forecast figures will vary depending on changes in the premises (preconditions) regarding them. As such, in studies for future policy-making, a proper apprehension of the conceivable changes that could possibly occur and quantitative analysis of their occurrence possibility and degree of influence are thought to be more important than a weighing of the highness or lowness of the absolute forecast values. The WG consequently developed several cases (noted below) which were judged to have a high possibility of occurrence and a high degree of influence.
(Notable item: perspective on supply capacity in China ) In the following cases, the factor with the greatest influence on the petroleum product supply and demand in Asia is the outlook on refining capacity in China. The 2015 capacity resulting from implementation of existing plans for capacity increase would not be large enough to meet the demand increase forecast to that year. There is consequently thought to be a good possibility of the addition of new plans for capacity increase to the level in the case of a high supply (refining) capacity (10.4 million b/d), provided that the demand remains firm. 1) Summary of cases in the study of petroleum product supply and demand (the details are presented in later sections) Table 3 Case
Overview of cases applied in the study Subject years
1
Differences from the base case
1
Existing CDU plan case
2010, 2015
2
Case of higher CDU capacity 2 in China (10.4 million b/d)
2015
CDU capacity of 10.4 million b/d, 1 million more than the base case level of 9.4 million b/d
3
Case of lower economic growth 3 in Asia
2015
Downward revision of the GDP growth rate, etc., beginning in 2010 (see the f o l l o wi n g page)
* The expanded refining capacity would consist of crude distillation units (CDUs) and secondary equipment.
2) Summary of cases in the study of long-term crude oil supply and demand (the details are described in Chapter IV, "Analysis of crude oil supply and demand") Table 4
Case
1 2 3
Overview of cases applied in the study
Subject years
Differences from the base case
1
Base case
2020, 2030
2
Case of heavier crude oil mix
2030
Increase in the share of crude oil production occupied by heavy crude oil from Saudi Arabia, Canada, and other countries
3
Case of an expanded API disparity
2030
Expansion of the price disparity for a ten-degree API disparity from three dollars to five dollars
Hereinafter referred to as “Existing plan case” Hereinafter referred to as “Higher capacity case” Hereinafter referred to as “Lower growth case” 3
IEEJ : February 2006 (3) Petroleum product supply and demand - comparison of other cases with the existing plan case While the existing plan case is the same throughout the study, the following is a description of it as compared to each of the other cases. Differences between the existing plan case and the case of higher capacity in China Existing plan case (case of plans known at the present time, serving as the basis of comparison) The factor of fluctuation with the strongest influence on the oil supply and demand in East Asia is the outlook on refining capacity in China. Because it is difficult to predict the trend of this capacity, the existing plan case is premised on one of 7.9 million b/d in 2010 and 9.4 million b/d in 2015, based on the sums of planning figures from the findings of interviews with China's major oil companies (SINOPEC and CNPC) and the addition of the capacity of independent refiners. (Note: The possibility of this case becoming the actual supply capacity is regarded as low.) While the extent of expansion in the demand in China over the years 2010 - 2015 is estimated to reach 1.84 million b/d, the existing plans add up to a corresponding addition of only 1.5 million b/d, for a substantial shortage of 340,000 b/d. It is therefore thought that China will prepare additional plans for a further increase close to that in the case of a high supply capacity there. As such, this case is thought to have little possibility of actualization. This is why it was termed the "existing plan case" instead of the "base case." Higher capacity case It is also fully possible that the supply capacity in China will expand substantially as the demand increases, such that the country will have a self-sufficient supply of gas oil, which accounts for about 40% of its product demand. The WG therefore also studied the case of a higher capacity in China. The premise here is an increase of 1 million b/d (to 10.4 million b/d) in CDU capacity, with a commensurate increase in the capacity of secondary equipment as well. (Note: This case of supply capacity in China is thought to have the highest possibility of actualization.) It was assumed that any additional refineries would each have a capacity of around 300,000 b/d. This case would be realized with addition of three or four more refineries than in the existing plan case. It is thought to have the highest possibility of actualization, considering the anticipated tightening of the supply in Asia.
4
IEEJ : February 2006 Differences between the existing plan case and the low growth case Existing plan case The forecast rate of economic growth is one of the premises of the forecast of the demand for petroleum products. The WG estimated these rates while considering economic outlooks prepared by national governments in the concerned countries, international institutions, and other such entities. For East Asia as a whole (excluding Japan), it projected an average annual growth rate of 7.6 % over the years 2002 - 2010 and 6.3% over the years 2010 – 2015, and forecast the petroleum product demand on this basis. For supply, it applied levels in those refining capacity plans thought to have the best prospects for actualization in each country. Lower growth case - Possibility of a slowing of economic growth in China (the engine of economic growth in the region) beginning in 2010, and accompanying deceleration of growth in the rest of Asia This case assumes an economic growth rate in Asia that is 1.0 % (0.5% in Japan's case) lower than in the existing plan case over the years 2010 - 2015. In this case, China and India would have annual average growth rates of 5.6 and 4.5%, respectively. As the projected rates in the existing plan case are on the conservative side, this case is thought to be fully possible as well. On the supply side, the WG made a review of the refining capacity in each country, and applied the same levels as in the existing plan case for China, Taiwan, and Vietnam, but made downward revisions relative to the existing plan case for other countries.
5
IEEJ : February 2006
III. Analysis of petroleum product supply and demand (2010 and 2015) 1. Forecast of petroleum product demand in East Asia and Asia as a whole - Increase of about 5.8% in the demand for oil in East Asia; Asia accounts for about 40% of the increase in the world oil demand (1) Existing plan case The demand for petroleum products in East Asia, which slumped under the influence of the economic crisis in 1998, is projected to recover and increase at an annual average rate of 4.1% over the years 2002 – 2010. After that period, the demand will continue to increase at 3.5% annually over the years 2010 - 2015 with the support of firm economic growth. In addition, the world oil demand is projected to increase by 12.20 million b/d over the years 2002 - 2010, and the demand in Asia, by 5.50 million b/d. If so, Asia would account for about 46% of the amount of increase in the world demand. This trend should continue virtually unchanged over the years 2010 - 2015, and give Asia about 40% of the worldwide demand. Table 5
Trend of petroleum demand in East Asia and Asia Existing plan case
Unit: million of b/d
Amount of demand 2002
2010
Lower growth case
Amount of increase
2015
02-10
10-15
AAGR
02-15
10/02
10/15
Amount of demand
Amount of increase
2015
10-15
China
4.8
7.7
9.5
2.9
1.8
4.7
6.0
4.4
9.3
1.6
Hong Kong
0.3
0.3
0.4
0.0
0.0
0.0
1.7
1.8
0.3
0.0
Taiwan
0.9
1.1
1.2
0.2
0.1
0.3
2.2
1.0
1.2
0.1
Korea
2.3
2.6
2.8
0.3
0.2
0.5
1.3
1.4
2.7
0.1
Singapore
0.8
1.0
1.1
0.2
0.1
0.3
2.6
2.5
1.1
0.1
Brunei
0.0
0.0
0.0
0.0
0.0
0.0
3.5
2.8
0.0
0.0
Indonesia
1.2
1.6
1.9
0.4
0.3
0.7
3.4
3.3
1.8
0.2 0.1
Malaysia
0.5
0.7
0.8
0.2
0.2
0.4
4.5
4.4
0.8
Philippines
0.3
0.4
0.5
0.1
0.1
0.2
3.0
4.2
0.5
0.1
Thailand
0.8
1.0
1.3
0.3
0.2
0.5
3.7
4.4
1.2
0.2
Vietnam
0.2
0.3
0.4
0.1
0.1
0.2
6.2
5.1
0.4
0.1
12.2
16.7
19.9
4.6
3.1
7.7
4.1
3.5
19.4
2.7
Japan
5.6
5.4
5.3
-0.2
0.0
-0.2
-0.5
-0.2
5.1
-0.3
India
2.4
3.1
3.9
0.8
0.8
1.6
3.6
4.6
3.8
0.7
Other Asian countries
0.7
1.1
1.4
0.4
0.3
0.7
5.1
4.8
1.3
0.2
Asia total (base demand)
20.8
26.3
30.5
5.5
4.2
9.7
3.0
3.0
29.5
3.2
World total (base demand)
77.8
90.1
100.1
12.2
10.1
22.3
1.8
2.1
99.2
9.1
East Asia total (excld. Japan)
East Asia (excld. Japan)
15.6
18.6
19.8
37.3
Asia
26.7
29.2
30.4
46.2
21.2
25.1
28.7
3.9
Refining capacity in Asia
31.1
19.5
Share of the global increase occupied by East Asia/Asia
41.3 3.6
7.5
2.2
29.8 2.7
2.8
Figure 1
(millions of b/d) 12.0
Existing plan case Low growth case 9.7
10.0
8.7 7.7
8.0
7.2
6.0 4.74.5 4.0 1.6 1.4 0.3
0.5 0.4 0.3 0.3
-2.0
Ko re a Si ng ap or e
Ko ng
H on g
C hi na
0.0
0.7 0.5 0.2 0.6 0.4 0.2 0.3 0.2 0.4 0.2
B ru ne i In do ne si a M la ys ia P hi lip in es Ea Th st ai A la si nd a to ta V l(e iet xc na ld m .J ap an )
0.3
6
-0.2 -0.5
0.7 0.6
Ja pa O th n er A A si si a I n nd a co ia to ta un l(b tr ie as s e de m an d)
2.0
Ta iw an
Share (%)
3.1
IEEJ : February 2006 (2) Lower growth case In this case, which places rates of GDP growth in Asian countries that are 1.0% (0.5% in Japan) lower than in the existing plan case, the 2015 demand for petroleum products would be about 1 million b/d less than in the existing plan case in Asia, and about 500,000 b/d less in East Asia (excluding Japan).
2. Refining capacity in East Asia and Asia as a whole - Expansion of capacity led by China, with increases planned in Indonesia, Vietnam, and India as well (1) Refining capacity in Asia Addition of the figures in existing plans for capacity increase indicates that the refining capacity in East Asia will increase by about 2.8 million b/d over the years 2002 - 2010. The WG put the increase over the years 2010 - 2015 at 2.6 million b/d on the assumptions shown in Table 6. Although plans for construction in the years leading up to 2015 are not clear in many respects, the WG added figures in plans thought to have the best prospects for actualization based on information collected in the countries in question. The assumption that capacity would be increased in correspondence with the rate of growth in the regional demand formed another premise of the forecast for the 2015 capacity. Table 6 shows the breakdown of the regional capacity in terms of atmospheric distillation units (CDUs). The WG also assumed that secondary equipment capacity would increase in response to plans for environmental regulation of fuel oil on the regional level. Table 6
Refining capacity in Asia (breakdown) Unit: 1000 of b/d Increase
CDU capacity Country/region
2002
2010
2015 (Existing plan)
2015 (Low growth)
02-10
10-15 (Existing plan)
10-15 (Low growth)
China Taiwan Korea
5,619 1,220 2,750
7,900 1,310 2,750
9,400 1,376 2,951
9,400 1,376 2,892
2,281 90 0
1,500 66 201
1.500 66 142
Singapore Brunei Indonesia
1,269 9 1,073
1,337 9 1,273
1,337 9 1,573
1,337 9 1,448
68 0 200
0 0 300
0 0 175
Malaysia Philippines Thailand
515 420 991
545 335 1,075
677 335 1,334
670 335 1,294
30 -85 84
132 0 259
125 0 219
0
130
270
270
130
140
140
13,865
16,663
19,260
19,029
2,798
2,597
2,366
4,767 2,135 442
4,736 3,029 720
4,736 3,794 909
4,736 3,629 864
-31 894 278
0 765 189
0 600 144
21,209
25,148
28,700
28,258
3,939
3,552
3110
Vietnam East Asia (excluding Japan) Japan India Other Asian countries Asia total
* Assumptions - Figures for CDU capacity in 2010 are additions based on various documentation and information obtaine d from oil companies in the various countries. In the case of secondary equipment, the forecast incorporated plans for nationwide instatement of the Euro 3 standard in China and India in 2010, and assumed expansion into an equipment composition (especially as regards desulfurization equipment) on a par with that in Europe at present beginning in that year in neighboring countries as well. - Figures for 2015 are set on the level of current plans in the case of China, India, and Indonesia. In other countries where demand is anticipated to increase, it was assumed that the overall refining capacity would increase in step with the rate of demand increase. No increase was foreseen in Singapore, the Philippines, and Brunei. - In the lower Asian growth case, figures for 2015 are reduced by a margin commensurate with the lower demand. In the case of India and Indonesia, the WG estimated the amount of decrease from plans. The figures for China, Taiwan, and Vietnam are the same as in the existing plan case.
7
IEEJ : February 2006 (2) Forecast of refining (CDU) capacity in China In China, there are independent refiners that help to fill the supply shortage for gas oil, which accounts for about 40% of the petroleum product demand. They perform mainly vacuum distillation of imported heavy fuel oil and produce low-quality gas oil to fuel on-premise power generation as well as asphalt and other petroleum products. They have strong ties with local governments and could survive as suppliers of products in China for the foreseeable future. 1) Refining capacity to 2015 (CDU capacity to 2010) Based on the findings of interviews with them as well as other documentation for facility additions and expansions whose year of completion is fairly certain, it is estimated that the combined refining capacity of the two big oil firms (SINOPEC and CNPC) will expand from about 5.3 million b/d at present to about 7.3 million b/d by 2010. The forecast for total refining capacity in China in 2010 is 7.9 million b/d based on addition of 600,000 b/d as the estimated CDU capacity of independent refiners (to be described below). As shown in Table 7, an increase of about 7.6 million b/d is planned over the years leading up to 2010, but about 600,000 b/d of this increase could be postponed to later years. In light of this possibility, the WG put the base case figure for 2010 at the mean of 7.3 million b/d. Table 7
CDU facility additions and expansions by major oil firms in China
Company Refinery
CNPC Dalian Petrochemical West Pacific Petrochemical Lanzhou Petrochemical Dushanzi Petrochemical Jinxi Petroleum Processing and Chemical Company SINOPEC Maoming Refining Guangzhou Phase 1 Guangzhou Phase 2 Shanghai Petrochemical/BP JV Yangzi Petrochemical/BASF JV Zhenhai Refining Luoyang Qingdao Huangdao
Jinling SINOPEC/Guangxi province JV Fujian: SINOPEC/ExxonMobil/ Aramco JV CNOOC Huizhou: CNOOC/Shell JV Tianjin: CNOOC/Dow Chemical JV Total addition Existing total Grand total
Additions/ expansions (thousands of tons)
Additions/ expansions (thousands of b/d)
Planned year of completion
10,000
200
2005
2,000 5,000 4,000 4,500
40 100 80 90
2005 2004 2005 2005
4,500
90
2004
2,300 8,000 5,200
46 160 104
2005 2008 2005
500
10
2005
6,000 2,000 10,000
120 40 200
2006 2005 2007
2,500 8,000
50 160
2005 2008 (target)
8,000
160
2008
12,000
240
2007
20,000
400
2010
114,500 265,800 380,300
2,290 5,316 7,606
Notes
Expansion in step with the China-Russia PL
Refining of Kazakhstan crude oil
Accompanying construction of the Maoming-Kunming PL Provisional Complex with 900,000-ton ethylene facility Complex with 700,000-ton ethylene facility
Policy to close 21 small refineries in the province upon completion of new projects with Shandong province Agreement with the province; start of construction in 2004 Complex with 800,000-ton ethylene facility
Complex with 800,000-ton ethylene facility Complex with 600,000-ton ethylene facility Based on plans to 2010 About 7 million b/d with postponement of 160,000 b/d in the SINOPEC/Guangxi project and 400,000 b/d in the CNOOC/Dow project to 2010.
Source: Based on the 2004 edition of "Oil and Petrochemical Industry in China," published by Tozai Boeki Tsushinsha, and interview data.
8
IEEJ : February 2006 (CDU capacity to 2015) (Existing plan case) The facility construction in plans over the years leading up to 2015 would give the major refiners a combined capacity of 440 million tons per year (about 8.8 million b/d). Although there is some uncertainty about the firmness of the plans and years of completion, the WG estimated the standard CDU capacity in 2015 at 9.4 million b/d on the assumption that the whole plans would be completed by 2015 and that there would be no decrease in the 600,000-b/d CDU capacity of the independent refiners. (Case of higher capacity ) There is some uncertainty about the expansion of refining capacity as of 2015, and the currently disclosed plans would leave a shortage of 340,000 b/d relative to the demand increase over the years 2010 - 2015. For these reasons, there is a high possibility of the construction of three or four refineries in the 300,000-b/d class over the coming years. For 2015, the WG placed an addition increase of 1 million b/d in CDU capacity. Because the independent VDU refiners would lose competitiveness in this case, it was assumed their capacity would be halved to 200,000 b/d. Table 8
Premises in the forecast of refining capacity in China to 2015
2003 5,300
2010 7,300
2015 8,800
Unit: 1000 of b/d High supply capacity case (increase of 1 million b/d in CDU capacity) 2015 9,800
600 5,900 400
600 7,900 400
600 9,400 400
600 10,400 200
Existing capacity estimate
Major refiners (two oil majors and others) Independent refiners (with CDUs) CDU total Heavy fuel oil VDU capacity (asphalt plants)
Existing plan case
Source: Based on various materials and interview data with SINOPEC/CNPC etc.
2) Refining capacity of small independent refiners From the information gained from Chinese oil companies and trading firms as well as other sources, independent refiners nationwide are estimated to have a combined capacity of about 1 million b/d and to number in the range of 80 - 100. Those that do not have the right to import crude oil import heavy fuel oil and process it with VDUs to produce low-quality gas oil and asphalt (at asphalt plants). There are estimated to be from 30 to 50 such plants, mainly in Shandong and Guangdong provinces. These plants conduct a marginal operation in that they suspend production if prices for foreign heavy fuel oil are too high, and have operating rates averaging no more than around 50 or 60% for the year. The national government is planning for facility additions and expansions at the two Chinese majors and the closure of small-scale independent refiners. The latter, however, are tied to local governments and provide jobs. It is consequently thought that they will remain in operation as long as their business is paying. Estimate of the VDU capacity of independent refiners from the heavy fuel oil feed China's import of heavy fuel oil came to 25 million tons in 2003 and more than 30 million tons in 2004. Some 18 - 22 million tons of this total is thought to be directed to power plants and industry. Application of 20 million tons for this subtotal as the mean figure would leave about 10 million tons (200,000 b/d) for the independent refiners in 2004. Assuming an average operating rate of 50% at their plants, their heavy fuel oil refining capacity would come to about 400,000 b/d, and their CDU capacity was put at 600,000 b/d.
9
IEEJ : February 2006 Table 9
Types and estimated capacities of independent refiners
Type 1. With CDUs (and a crude oil processing quota) 2. Heavy fuel oil vacuum distillation Asphalt plants (operating rate of 50%)
1 + 2 = Independent refiner total
Capacity 600 400
1,000
Unit: 1000 of b/d Comments 50 - 60 plants, with a capacity of a few thousand - 20,000 b/d per plant Premise: 200,000 b/d of heavy fuel oil for independent refiners Great fluctuation in operating rates depending on heavy fuel oil prices and the gas oil spread Estimated number nationwide: 80 100
Source: estimates based on field studies and various information
Incorporation of heavy fuel oil VD refiners (asphalt plants) into the LP model Based on the aforementioned premises and assumptions, a distinction was drawn between conventional crude oil refining and heavy fuel oil VD refining (at asphalt plants). The flow shown in Figure 2 was added to the existing Chinese refining model for more accurate reflection of the situation of each type of refining. Based on the findings of interviews with SINOPEC, the rate of production through VD of imported heavy fuel oil was put at 40% for low-quality gas oil and 60% for other petroleum products (e.g., asphalt). Figure 2
Imported or domestically purchased heavy fuel oil LowQuality gas oil 40％
VD
Other products(asphalt or high-viscosity heavy oil） 60％
10
IEEJ : February 2006
3. Balance of petroleum product supply and demand in East Asia (1) Existing plan case - The balance of petroleum product supply and demand in East Asia (excluding Japan) is forecast to amount to a net import of 1.44 million b/d in 2010 and 2.00 million b/d in 2015. This suggests the need for a further increase in supply capacity in China. 1) Supply-demand balance The increase in supply (refining) capacity from 2002 to 2010 is expected to cover about 60% of the demand increase. Although operating rates would rise by about 9%, the supply-demand gap would widen to a 1.44-million-b/d import position. In 2015 as well, the petroleum product demand would exceed the refining capacity, and refinery-operating rates are forecast to rise further to 92%. At this point, the refineries would be operating at their full capacity, but would nevertheless be unable to fill the demand, and the import position would expand to 2.06 million b/d. This level of import would be 1.04 million b/d larger than the record-high import in 1995 (640,000 b/d), and would presumably present a problem of supply stability (to be described below). Table 10
Petroleum product supply-demand balance in East Asia (excluding Japan) and Asia as a whole (existing plan case)
Unit: millions of b/d Petroleum product demand Petroleum product production Supply-demand gap Subtotal: supply-demand gap in China Refining capacity Refining facility operating rate
2002
2010 12.2 11.4 -0.8 -0.4
16.7 15.3 -1.4 -0.8
13.9
19.9 17.8 -2.1 -1.2
16.7
82.2%
Amount of increase 02-10 10-15 4.7 3.9 -0.9 -0.6
2015
19.3
91.7%
2.8
92.4%
3.1 2.5 -0.6 -0.4 2.6
9.5%
0.7%
2) Refining capacity and supply-demand balance in China The supply-demand gap in China would account for about half of that in East Asia. China is going to construct new large-scale refineries over the coming years, and average-operating rates therefore should rise. According to information from the two major oil companies, however, the effective ceiling for the average operating rate is forecast at 85% in 2010 and 87% in 2015. Assuming an expansion in the net import of products in Asia as a whole, it would be doubtful whether China could actually import to cover its supply shortage. As such, the WG considered the case of a higher supply capacity in China (i.e., a further increase in its refining capacity; to be described below). Figure 3
12,000
9,400 7,900
0
2002
2010
11
2015
Demand in low growth plan case
Demand in exsinting plan case
Facility capacity
Actual demand
79.2%
Facility capacity
4,000
Rise in operatingt rate
379
4,451
Demand in exsinting plan case
85.0%
87.0%
Facility capacity
5,619 6,000
8,378
Rise in operatingt rate
770
6,915
Actual operating rate
(Thousands of B/D)
Increase of 2,281 B/D
8,000
2,000
1,148
Increase of 1,500 B/D
10,000
IEEJ : February 2006 A look at the forecast balance in each country reveals that the only Asian countries in an export position in both 2010 and 2015 are Taiwan, Korea, Singapore, and India. Margin for export in Singapore, where refining capacity is not expected to increase, is likely to decline with the approach of 2015. All of the other countries are in an import position. The import position of China including Hong Kong is forecast to rise from 1.09 million b/d in 2010 to 1.49 million b/d in 2015. Figure 4 F.Y.2010(Existing plan & Lower growth cases) China Hong Kong Chinese Taipei Korea Singapore Brunei Indonesia Malaysia Philippines Thailand Vietnam East Asia Total (excl. Japan) East Asia Total
F.Y.2015(Existing plan case)
-770
China -1,148 -351 Hong Kong 135 142 Chinese Taipei 40 41 Korea 317 191 Singapore -6 Brunei -8 -357 -348 Indonesia -135 -168 Malaysia -114 Philippines -212 -15 -19 Thailand -218 -183 Vietnam East Asia Total -1,443 -2,063 (excl. Japan) -2,299 -2,869 East Asia Total 100 India India 125 Other Asia -363 -458 Other Asia -3,202 Asia Total -2,561 Asia Total -3,000 -2,500 -2,000 -1,500 -1,000 -500 0 500 -3,500 -3,000 -2,500 -2,000 -1,500 -1,000 -500 0 500 （1000 B/D) （1000 B/D) Negative Figures indicate net import. Negative Figures indicate net import. -320
Analysis of China's import and export in each product category in the existing plan case - Considering the net import position of 1.15 million b/d in the existing plan case and the balance outside Asia, China is forecast to move in the direction of supply capacity expansion in 2015. In comparison between 2010 and 2015, when China's net import is forecast to expand further, the forecast envisions import from the Middle East and Russia to meet this increase. The import from Russia should increase by the greatest extent. Russia has shipment facilities for products other than LPG and produces straight run heavy fuel oil with little heavy metal content. For this reason, it is preferred as a supplier for on-premise power generation fuel and independent VD refiners of imported heavy fuel oil. At present, shipments are carried to ports from inland refineries by rail. From the ports, they are carried by tanker to the sites of demand in southern China (where there are many such independent refiners). However, it is questionable whether Russia will be able to export just under 400,000 b/d in 2015. Therefore, Chinese policy-makers and the two major oil companies will presumably effect a bigger expansion in product capacity by 2015 in order to avoid such an import position, which would be marked by deep uncertainty. Because there are no such concrete plans at present, however, the WG placed an additional case of a higher supply capacity in China, i.e., a CDU capacity of 1 million b/d more than in the existing plan case.
12
IEEJ : February 2006 Table 11 China Type of product Gasoline Naphtha Kerosene/Jet Gas oil Heavy fuel oil LPG Other Total
Existing plan case - China's product import and export in 2010
* Four countries 0 14 0 13 253 43 0 323
Import breakdown Middle East Russia Other countries 0 0 0 100 34 15 0 0 0 22 0 0 0 144 0 132 0 0 0 0 0 254 178 15
Import total 0 163 0 35 397 175 0 770
Unit: 1000 of b/d Export Net export 0 0 0 -163 0 0 0 -35 0 -397 0 -175 0 0 0 -770
* Four countries: Korea, Japan, Taiwan, Singapore
Breakdown of China's independent asphalt plants Input of imported heavy fuel oil 200
Table 12 China Type of product Gasoline Naphtha Kerosene/Jet Gas oil Heavy fuel oil LPG Other Total
Low-quality gas oil 40% 80
Asphalt 60% 120
Existing plan case - China's product import and export in 2015
* Four countries 0 0 0 186 160 12 0 357
Import breakdown Middle East Russia Other countries 0 0 0 126 67 71 52 37 0 22 0 0 0 239 0 148 34 0 0 0 0 348 376 71
Import total 0 264 89 207 398 193 0 1,152
Unit: 1000 of b/d Export Net export 0 0 0 -264 0 -89 0 -207 0 -398 0 -193 3 3 3 -1,148
* Four countries: Korea, Japan, Taiwan, Singapore
Breakdown of China's independent asphalt plants Input of imported heavy fuel oil 200
Low-quality gas oil 40%
Asphalt 60%
80
120
(2) Change in the supply-demand balance in the case of higher capacity (CDU and secondary equipment) in China in 2015 - Even in the case of a higher capacity in China, the East Asian region would be in a net import position of about 1.3 million b/d. Expansion of China's supply capacity is a vital key for stabilization of the product supply and demand in East Asia. 1) Analysis of the case of higher capacity in China This case places a CDU capacity that is 1 million b/d higher than in the existing plan case. In it, the 2010 gap with the demand would decrease from 770,000 to 380,000 b/d in China and to 1.4 million b/d in East Asia. The existing plan case assumes production at the maximum operating rate in all East Asian countries. In the case of higher capacity in China, too, it is assumed that production in these other countries will stay on this maximu m level and that the supply-demand balance will be the same as in the existing plan case. Table 13 Petroleum product supply-demand balance in East Asia (excluding Japan) (case of higher capacity in China) (Unit: millions of b/d) Petroleum product demand Petroleum product production Supply-demand gap Subtotal: supply-demand gap in China Refining capacity Refining facility operating rate
2002
2010 12.2 11.4 -0.8 -0.4
16.7 15.3 -1.4 -0.8
13.9 82.2%
2015 19.8 18.5 -1.3 -0.4
16.7 91.7%
13
Amount of increase 02-10 10-15 4.7 3.9 -0.9 -0.6
20.3 91.1%
2.8 9.5%
3.0 3.2 0.1 0.4 3.6
-0.6%
IEEJ : February 2006 In the case of higher capacity in China in 2015, the supply-demand balance in East Asia would amount to a net import of 1.3 million b/d, 760,000 b/d less than in the existing plan case. In this case, the average operating rate in Chinese refineries would decline by 1%, and production of gas oil by cracking imported heavy fuel oil would decline by 40,000 b/d. Petroleum product production would increase by 670,000 b/d, and China's net import position would shrink to about 380,000 b/d. Due to the increase in demand in other Asian countries, import would be 700,000 b/d higher than in 1995, when the highest import over the last ten years was recorded. (1000b/d)
Net Import
Net Export
Figure 5
400 -240
-350
0
-230
-400
Higher capacity case
-400
-380
-760
-640
-800 -1,300
-1,440
-1,200 -1,600 -2,000 -2,060
-2,400
2015
2010
2002
2000
1999
1998
1997
1996
1995
Existing plan case
As compared to the existing plan case, the amount of net import is lower in China, but there is not any change in the supply-demand balance for other countries because of the lack of change in demand and facility operating rates. As such, the situation of only four countries being in a net export position (Taiwan, Korea, Singapore, and India) would be the same as in the existing plan case. Figure 6
2015 (Case of higher capacity )
2015 (Existing plan case)
China
-1,148 -351
Hong Kong Chinese Taipei
142
Korea
-212
Thailand
-183
-19 -183
Vietnam
East Asia Total(excl. Japan) -2,063
East Asia Total(excl. Japan)
East Asia Total -2,869
India Other Asia
-168
Philippines
-19
Vietnam
-348
Malaysia
-212
Thailand
191 -8
Indonesia
-168
Philippines
142 41
Brunei
-348
Malaysia
-351
Singapore
-8
Indonesia
-382
Hong Kong Korea
191
Brunei
Net Export-->
China Chinese Taipei
41
Singapore
